Institute for Energy Economics and Financial Analysis has warned that Germany risks wasting tens of billions of euros by overestimating future hydrogen demand.
The report argues that Germany’s hydrogen infrastructure plans are based on projections that may not materialise, as electrification and cheaper alternatives reduce hydrogen use across industry, heating, transport and power generation.
Researchers said Germany could face around €45 billion in additional public funding costs if hydrogen demand falls short of expectations.
According to the analysis, taxpayers could ultimately be liable for at least €34.7 billion in hydrogen pipeline costs by 2055 under a limited-demand scenario.
Researcher Alasdair Docherty said: “This matters because Germany is financing its hydrogen network on the assumption that demand will grow quickly enough for users to repay the costs over time.
“If that demand fails to materialise, taxpayers will be on the hook.”
The report also warned that Germany’s growing support for blue hydrogen could deepen reliance on natural gas imports.
Germany’s Hydrogen Acceleration Act, passed in February 2026, classified blue hydrogen production as being in the “overriding public interest”, marking a shift away from the country’s earlier focus on green hydrogen produced from renewable energy.
Docherty said: “A pivot to blue hydrogen would add a network of costly carbon dioxide pipelines and re-entrench Germany’s dependence on volatile global gas markets, threatening long-term energy security and industrial competitiveness.”
The report recommends scaling hydrogen infrastructure in line with confirmed demand – and increasing the use of imported hydrogen derivatives for targeted industrial applications.
Researchers also urged policymakers to reduce overlap between hydrogen investment and liquefied natural gas infrastructure to avoid unnecessary public spending.
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